Research On Dividend Compulsory Distribution Of Limited Liability Company

The right to benefit from assets is the basic right of shareholders,but in practice,it is often infringed because the company refuses to distribute profits.Although Article 15 of the provisions on Several Issues concerning the application of the company law of the People’s Republic of China(IV)(hereinafter referred to as the judicial interpretation of the company law(IV))promulgated by the Supreme People’s court stipulates the trigger conditions for the compulsory distribution of dividends,provides a relief way for minority shareholders whose right to claim for profit distribution is impaired,and highlights the fairness and justice of the law,there are still many problems in practice that deserve attention.The paper adopts the total score structure,and puts forward solutions and suggestions for the three types of difficulties on the basis of summarizing the practical difficulties of compulsory dividend distribution.Specifically,The first chapter mainly introduces three kinds of difficulties in the judicial practice of compulsory dividend distribution of limited liability companies,and discusses their legislative status and adverse effects respectively.It mainly includes three categories: the judgment standard of controlling shareholders’ abuse of rights is not clear;The allocation of the burden of proof of shareholders is unreasonable;The rules for determining the amount of dividend distribution are not perfect.The second chapter introduces the improvement of trigger conditions for compulsory dividend distribution,and clarifies the identification standards of controlling shareholders’ abuse of rights from the aspects of practical performance and applicable standards.First of all,it summarizes the common manifestations of three types of abuse of rights,namely,the use of related party transactions for benefit transfer,profit distribution in disguised form,and the abuse of corporate property;Secondly,it introduces the theory of fiduciary duty and the principle of reasonable expectation,and analyzes and summarizes the essence of abuse of rights.From the behavioral point of view,the accusers of a series of illegal or unreasonable acts against minority shareholders,which violate the balance of interests;From the perspective of results,it means that the legal rights of shareholders,the rights stipulated in the articles of association or the rights agreed in the shareholders’ agreement,the interests of shareholders,and the reasonable expectations of shareholders in the establishment and subsequent business development of the company are all impaired.The third chapter determines the trigger conditions of compulsory dividend distribution from a procedural point of view on the basis of the determination of the criteria for the abuse of rights by controlling shareholders,focusing on the reasonable allocation of the burden of proof of shareholders.In view of the unequal substantive status of both parties,the minority shareholders bear the preliminary burden of proving that the controlling shareholders abuse their rights and the company has distributable profits but refuse to distribute them;The controlling shareholder shall bear the specific burden of proof,including proving the lack of distributable profits of the company,the legality of signing contracts for related party transactions,the legality of obtaining high salaries,and the independence of personal property from the company’s assets.The fourth chapter provides suggestions on how to determine the specific distribution amount when the dividend is forcibly distributed.In order to ensure sustainable operation,the company’s funds cannot be distributed in full,and the company’s free cash can only be used as the distribution object.Determine two groups of financial ratios as the discretionary basis for free cash: asset liability ratio + current ratio or quick ratio;Ratio of cash from operations to current liabilities + ratio of cash from operations to total liabilities.The basis for determining the distributable amount is: the withdrawal proportion of the discretionary accumulation fund will stop when it reaches 50% of the company’s registered capital;The basis for determining the upper limit of distribution is the possibility of sustainable operation and development of the company.The lower limit of distribution refers to the interest rate of multi-year bank fixed term deposits and loans and the after tax debt capital cost of issued long-term bonds;Fine tune according to the industry situation and evidence;Choose property dividends and debt dividends instead of cash dividends.